Why Tony Abbott is wrong about Adani

Australian Prime Minister Tony Abbott has come out attacking environmentalists and the courts after a Federal Court set aside the environmental authority of the Carmichael mine in Queensland. The operation, which will be Australia’s biggest mine, is owned by Indian energy company Adani. The Federal court found that Environment Minister Hunt had not properly considered advice about two threatened species — the yakka skink and the ornamental snake in the Galilee basin.

Abbott came out swinging today saying the courts and environmentalists had sabotaged the project and were robbing Indians of badly needed power.

“Let them go ahead for the workers of Australia and for the people of countries like India who right at the moment have no electricity. Imagine what it’s like to live in the modern world with no electricity,” the prime minister said.

But EAS Sarma, former secretary of India’s ministry of power, says Abbott doesn’t know anything about India and has no idea why it has power shortages.

He points out that India’s population of 1.24 billion comprises 247 million households, 68 per cent of whom live in rural villages. According to the 2011 census, 45 per cent of these rural households – 75 million – have no electricity. In the rural areas, many remote villages are beyond the reach of the electricity grid. There are also many families in electrified villages who cannot pay for expensive electricity. Coal would make no difference to these people.

Another reason for the shortages is because of corruption, which is part of India’s political fabric. The Herald Net reports that “transmission and distribution losses in some states are as much as 50 per cent because of theft and corruption by employees in the power industry.”

No amount of Australian coal will solve that.

Then again, the Adani mine is unlikely to get up because of its flawed business model. As reported here, Adani’s business modelling is built around a thermal coal price of between US$80-100. It currently sits at US$60. It can’t get up if the price stays that low, and no one is expecting it to rise.